New Zealand’s biggest urban bus company will soon be running its vehicles on electric engines following the inking of a deal a company founded by Ian Wright, a Kiwi and co-founder of Tesla.

NZBus which runs more than 1,000 buses across NZ, carrying more than 50m passengers each year has signed the deal with Wrightspeed.

The $AUD40m deal will result in a large number of the NZ buses having their diesel engines removed and replaced with twin electric motors, a battery pack and a gas turbine generator that charges the batteries when needed.

Wrightspeed previously retrofitted garbage trucks and FedEx delivery vans with similar technology in the US. The New Zealand deal however is the first move for the company outside the US and the first for this technology in public transport.

NZBus hasn’t said how many buses would be converted, but chief executive Zane Fulljames said the first step would be to convert 60 electric trolleybuses in Wellington to the technology before moving on to its diesel powered buses.

“It will be a significant proportion of our fleet,” he said.

Fulljames said the first converted buses should be on the road by October.

Wright said that with most countries relying heavily on coal for electricity generation, the on-board gas generator was a cleaner way to charge the batteries than using electricity from the grid.

However, the batteries can also be charged from the grid, which in New Zealand is supplied by an unusually high amount of renewable energy about 80 per cent.

“In New Zealand it’s unusual in that regard and it’s about the one place you can say it’s cleaner to get it from the grid,” said Wright. “The turbine is about 10 times cleaner than a piston engine,” he said.

By carrying a generator, the buses can carry an order of magnitude less battery power.

“If we tried to make one of these buses without the range-extender, it would have to carry about 500kwh of battery packs. We carry less than a 10th of that – about 40kwh.”

Wright said the technology could provide unusually high torque, with two separate motors and four gears. That allowed the buses to go up steep hills, but also gave them very efficient regenerative braking, using the powerful motors to stop the bus, and charging the batteries in the process.

By saving money on fuel and maintenance, Wright said garbage trucks in the US were able to make back the cost of the conversion in just three years.

Last year an Australian company ran a demo electric bus, travelling the 1,018km from Melbourne to Sydney without a charge and without an on-board generator.

Thousands of all-electric buses with batteries are on the road in China.

Fulljames said NZBus looked at all-electric options but they weren’t powerful enough to climb some of the steep hills in New Zealand and diesel-hybrid buses had significantly higher emissions.

They calculated an ordinary diesel bus would emit 207kg of CO2 per day, but the new converted buses would emit about 23kg of CO2, not including emissions associated with charging the buses from the grid.

“Wrightspeed’s powertrains outperformed the competition on nearly every metric,” Fulljames said.

Fulljames said that as battery prices dropped, NZBus would look at replacing the range-extender with more battery storage, converting the buses to all-electric.